Analyst: CBS Would Win the C7 Battle

After taking a good, long look at TiVo’s set-top-box data as it pertains to prime time broadcast ratings, one influential analyst is of the opinion that Les is more.

According to an investor’s note posted by Bernstein Research senior analyst Todd Juenger, the recent kerfuffle over the TV ratings currency is something of a tempest in a teapot. That said, it stands to reason that CBS Corp. CEO Les Moonves has been particularly vocal about making the jump from the C3 standard to enhanced C7 ratings—for one thing, CBS would enjoy the biggest lift from the additional four days of deliveries.

Per TiVo’s set-top data, the broadcast networks see an average boost of 3 percent in nightly commercial deliveries when the time period under examination is extended from three days to seven.

For the most part, the members of the Big Four would generally enjoy the same modest benefit from operating in a C7 universe. In the fourth quarter of 2011, CBS saw a 3 percent lift with four additional days of time-shifted playback, edging NBC by one-tenth of a ratings point and beating ABC by two-tenths. Statistically, Fox saw the smallest boost, as its 18-49 deliveries increased by 2.4 percent.

But as Juenger pointed out, CBS’s slight advantage over its peers would likely translate into an edge in ancillary ad sales revenues. This is a function of CBS’ not having a vast portfolio of ad-supported cable networks, unlike NBCUniversal, News Corp. and Walt Disney Co.

“We estimate the broadcast networks would be expected to gain about 0.5 percent share of national ad revenue from the cable networks, or about $115 million in the aggregate,” Juenger wrote. “CBS is the only net gainer, since all the other broadcast networks also have significant groups of ad supported cable networks.” In other words, any gains made by ABC, NBC and Fox would be effectively offset by decreases at, say, ABC Family, USA Network and FX.

When the industry first adopted C3 as the currency back in 2007—Nielsen defines the metric as live commercial viewing plus three days of DVR playback—it was largely seen as an unavoidable compromise. While media buyers and ad sales execs lobbied for a more flexible system that would take into account time-sensitive categories (movies, retail, automotive), Nielsen simply could not offer a sliding scale of C3, C7 and C14 streams. C3 was viewed as the best of all possible options at the time, although it’s always been perceived as a placeholder until something better comes around.

But as Piviotal Research Group analyst Brian Wieser observed, broadcasters have more to worry about than a few days of late-to-the-party deliveries. “The networks would be better off in focusing on alternative revisions to the currency—i.e., cross-platform ratings—as these would put everyone further ahead, anyways,” Wieser wrote Friday in a note to investors.

Indeed, Moonves said as much last week, when he challenged Nielsen to develop a system that would capture all viewing, be it on linear TV, video-on-demand, online streaming and the iPad. “One of the things looking forward that we need to have happen is for Nielsen to get better,” Moonves said Dec. 5 at the UBS Global Media and Communications Conference in New York. “There are a lot of people watching our shows that are unreported.”

Moonves would go on to acknowledge that Nielsen is laboring mightily to merge TV ratings and streaming data. “I think Nielsen is trying really hard to get all the eyeballs in…and when that happens there’s going to be much more accuracy,” he said. “And that’ll be good for everybody.”

Or as Wieser put it, “the adoption of a cross-platform metric as a currency would better enable networks to expand the inventory they have for sale and at the pricing they currently receive for conventional TV inventory.”

Given broadcast’s ongoing ratings turbulence—through the first 11 weeks of the 2012-13 season, CBS is down 18 percent in the 18-49 demo, while Fox has gone from first to worst among the Big Four, plummeting 26 percent to a 2.5 rating—and uncertainties about the macroeconomic recovery, Wieser said the networks won’t be heading into the spring upfront season in a position of strength. As such, it would be wise for the broadcasters to agitate for a cross-platform metric that would ensure that all ancillary streams are measured and accounted for.

“It would seem inevitable…that the networks will eventually push for measurement changes,” Wieser said. “Those changes which incorporate at least some mutual interest will ultimately generate more traction that lasts.”

Of course, if TV is to emerge into its next golden age, it’s going to have to part ways with the musty age- and gender-based demographics that serve as mere proxies for the actual consumers that the medium so ably delivers. And CBS is leading the charge there as well, as research guru David Poltrack continues to preach the gospel of embracing Big Data as a means to better triangulate consumers, brands and media environments.

After taking a good, long look at TiVo’s set-top-box data as it pertains to prime time broadcast ratings, one influential analyst is of the opinion that Les is more.

According to an investor’s note posted by Bernstein Research senior analyst Todd Juenger, the recent kerfuffle over the TV ratings currency is something of a tempest in a teapot. That said, it stands to reason that CBS Corp. CEO Les Moonves has been particularly vocal about making the jump from the C3 standard to enhanced C7 ratings—for one thing, CBS would enjoy the biggest lift from the additional four days of deliveries.

Per TiVo’s set-top data, the broadcast networks see an average boost of 3 percent in nightly commercial deliveries when the time period under examination is extended from three days to seven.

For the most part, the members of the Big Four would generally enjoy the same modest benefit from operating in a C7 universe. In the fourth quarter of 2011, CBS saw a 3 percent lift with four additional days of time-shifted playback, edging NBC by one-tenth of a ratings point and beating ABC by two-tenths. Statistically, Fox saw the smallest boost, as its 18-49 deliveries increased by 2.4 percent.

But as Juenger pointed out, CBS’s slight advantage over its peers would likely translate into an edge in ancillary ad sales revenues. This is a function of CBS’ not having a vast portfolio of ad-supported cable networks, unlike NBCUniversal, News Corp. and Walt Disney Co.

“We estimate the broadcast networks would be expected to gain about 0.5 percent share of national ad revenue from the cable networks, or about $115 million in the aggregate,” Juenger wrote. “CBS is the only net gainer, since all the other broadcast networks also have significant groups of ad supported cable networks.” In other words, any gains made by ABC, NBC and Fox would be effectively offset by decreases at, say, ABC Family, USA Network and FX.

When the industry first adopted C3 as the currency back in 2007—Nielsen defines the metric as live commercial viewing plus three days of DVR playback—it was largely seen as an unavoidable compromise. While media buyers and ad sales execs lobbied for a more flexible system that would take into account time-sensitive categories (movies, retail, automotive), Nielsen simply could not offer a sliding scale of C3, C7 and C14 streams. C3 was viewed as the best of all possible options at the time, although it’s always been perceived as a placeholder until something better comes around.

But as Piviotal Research Group analyst Brian Wieser observed, broadcasters have more to worry about than a few days of late-to-the-party deliveries. “The networks would be better off in focusing on alternative revisions to the currency—i.e., cross-platform ratings—as these would put everyone further ahead, anyways,” Wieser wrote Friday in a note to investors.

Indeed, Moonves said as much last week, when he challenged Nielsen to develop a system that would capture all viewing, be it on linear TV, video-on-demand, online streaming and the iPad. “One of the things looking forward that we need to have happen is for Nielsen to get better,” Moonves said Dec. 5 at the UBS Global Media and Communications Conference in New York. “There are a lot of people watching our shows that are unreported.”

Moonves would go on to acknowledge that Nielsen is laboring mightily to merge TV ratings and streaming data. “I think Nielsen is trying really hard to get all the eyeballs in…and when that happens there’s going to be much more accuracy,” he said. “And that’ll be good for everybody.”

Or as Wieser put it, “the adoption of a cross-platform metric as a currency would better enable networks to expand the inventory they have for sale and at the pricing they currently receive for conventional TV inventory.”

Given broadcast’s ongoing ratings turbulence—through the first 11 weeks of the 2012-13 season, CBS is down 18 percent in the 18-49 demo, while Fox has gone from first to worst among the Big Four, plummeting 26 percent to a 2.5 rating—and uncertainties about the macroeconomic recovery, Wieser said the networks won’t be heading into the spring upfront season in a position of strength. As such, it would be wise for the broadcasters to agitate for a cross-platform metric that would ensure that all ancillary streams are measured and accounted for.

“It would seem inevitable…that the networks will eventually push for measurement changes,” Wieser said. “Those changes which incorporate at least some mutual interest will ultimately generate more traction that lasts.”

Of course, if TV is to emerge into its next golden age, it’s going to have to part ways with the musty age- and gender-based demographics that serve as mere proxies for the actual consumers that the medium so ably delivers. And CBS is leading the charge there as well, as research guru David Poltrack continues to preach the gospel of embracing Big Data as a means to better triangulate consumers, brands and media environments.